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Operator: Ladies and gentlemen, welcome to the Novonesis Interim Report for the First 9 Months of 2025 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Cornelius Björklund. Please go ahead.
Tobias Björklund: Thank you, operator, and welcome, everyone, to the Novonesis conference call for the first 9 months of 2025. As mentioned, my name is Tobias Björklund. I'm heading up Investor Relations here at Novonesis. In this call, our CEO, Ester Baiget, and our CFO, Rainer Lehmann, will review our performance for the first 9 months of the year as well as the outlook for 2025. Attending today's call, we also have Tina Fano, EVP of Planetary Health Biosolutions; Henrik Joerck Nielsen, EVP of Human Health Biosolutions; Andrew Taylor, EVP of Food & Health Biosolutions; and Claus Crone Fuglsang, Chief Scientific Officer. The conference call will take about 45 minutes, including Q&A. Please change to the next slide. As usual, I would like to remind you that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs, and they involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statements. With that, I will now hand you over to our CEO, Ester. Ester, please.
Ester Baiget: Thank you. Thank you, Tobias, and welcome, everyone. Thank you for joining us this morning. Please turn to Slide 3. Thank you. We continue to deliver on our promises, and on the back of a strong first half of 2025, we delivered organic sales growth of 8% in the first 9 months. The third quarter was stronger than expected, including some positive timing effect and grew by 6%. Growth was broad-based and mainly volume-driven as pricing contributed by around 1%, both in the first 9 months and in the quarter. The exit of certain countries impacted organic sales growth negatively by around 1 percentage point in the first 9 months and by around 2 percentage points in the third quarter. Emerging markets were particularly strong at 12% growth, driven by increased local presence and tailored solutions for different customer needs. We continue to invest in these markets to further drive growth and fulfill our strategic goals. Since late 2024, we have made significant investments in customer-facing activities with commercial resources in emerging markets growing at more than twice the rate of developed markets. Growth in developed markets reached 6% with solid performance in both Europe and North America. Sales synergies are well on track and contributed close to 1 percentage point with positive impact across the businesses. The integration of the Feed Enzyme Alliance acquisition, which closed on June this year, is progressing as planned, and we are already now seeing the benefits from a strong Biosolutions portfolio and being closer to customers. Performance since closing is in line with expectations. We launched 4 new Biosolutions in the quarter, bringing the year to 19 in total. As an example, in Food & Beverages, we have launched innovation that tapped into higher consumer demand for healthier and more nutritional products, including high-protein solutions. Another example of innovation, tapping into growing consumer demands includes high-performance solutions for quick and cold wash cycles in Household Care. The adjusted EBITDA margin for the first 9 months of the year was 37.3%, an increase of 1.3 percentage points compared to last year. The margin includes significant currency headwinds, showing the strong underlying operational performance, while also we continue to invest for growth. Central to our growth performance and strong performance is Novonesis' unique ability to deliver solutions that enhance productivity, enhance efficiency, quality, bring health benefits and sustainability for our customers and consumers. While our Biosolutions typically account for a small portion of our customers' costs of goods sold, they play a significant role in enabling value creation. Additionally, our well-diversified presence across industries and geographies provides resilience and strength to our overall performance. After strong 9 months performance, including favorable timing in the third quarter, we'll leave the bottom end of the range and now expect organic sales growth to be between 7% to 8%. This includes an indication of mid-single-digit organic sales growth for the fourth quarter. We expect the adjusted EBITDA margin to be at the lower end of the 37% to 38% range, continuing to absorb the significant currency headwind compared to the initial outlook for the year. I'm also pleased that the strong earnings translate into healthy cash generation. And with that -- with this, let us now look at the divisional performance in more detail. Let's start with Food & Health Biosolutions. If you could please turn to Slide #4. Thank you. The Food & Health BioSolutions division delivered 9% organic sales growth in the first 9 months of the year, and adjusted EBITDA margin was 35.6%, an increase of 30 basis points. In the quarter, organic sales growth was 6%, including the negative impact of around 5 percentage points from the exit of certain countries. For 2025, we expect this division to deliver organic sales growth within the same range as for the group with relatively stronger growth in human health. Please turn to Slide #5. Thank you. Food & Beverages delivered 8% organic sales growth in the first 9 months and 5% in the quarter, including the impact of exiting certain countries. Growth was mainly driven by volume, where pricing contributed positively and in line with group level. Growth in the first 9 months as well as for the third quarter was anchored across most categories with continued strong momentum in Dairy, including positive impact from timing. Performance was mainly driven by upselling and strong customer adoption of innovation. In Fresh Dairy, we continue to see increasing demand for our tailored solutions in the high protein space and in bioprotection, supported also by healthy underlying global demand for yogurt. Additionally, in Cheese, customer conversion contributed to growth. Baking, Meat and Plant-based solutions also saw strong growth mainly driven by innovation and increased penetration. The Beverage segment declined, impacted mainly by lower end market volumes. Synergies contributed to growth and in line with expectations, supported by cross-selling and increased commercial scale across Food & Beverages. On the innovation front, we launched 2 new products in the quarter, making it 10 in total for the first 9 months. Growth in 2025 in Food & Beverages is expected to be broad-based, including a positive impact from synergies. Please turn to Slide #6. Thank you. Human Health delivered 10% organic sales growth in the first 9 months of the year and 8% in the third quarter. Again, growth was mainly volume-driven and negatively impacted from the exit of certain countries. The release of deferred revenue contributed around 1 percentage point to the growth for both periods. In the first 9 months, the development was driven by a strong performance in both Dietary Supplements and Advanced Health & Nutrition. Synergies contributed positively to growth and in line with expectations. Dietary Supplements grew across regions, led by solid momentum in North America. Performance in Advanced Health & Nutrition was supported by Advanced Protein Solutions, as we continue to ramp up revenue with our anchor customer. Growth in Early Life Nutrition was led by HMO. In the third quarter, growth in Dietary Supplements was driven particularly by strong performance in North America across subcategories with Women's Health and the Healthcare Practitioner Channel as a strong contributors. In Advanced Health & Nutrition, the drivers for the third quarter were similar to those for the first 9 months. For 2025, growth in Human Health will be driven by a continued positive momentum in dietary supplements, supported by a positive impact from synergies and by Advanced Health & Nutrition, including the continued progress with our anchor customer. Deferred revenue is expected to contribute around 1 percentage point for the growth for the sales area. Please turn to Slide #7 for -- and let's look at Planetary Health. Thank you. Planetary Health Biosolutions delivered 8% organic sales growth in the first 9 months of the year. The adjusted EBITDA margin was 38.7%, an increase of 2 percentage points. In the third quarter, organic sales growth was 6%. For 2025, we expect this division to deliver organic sales growth around the low end of the group with relatively stronger growth in Agricultural, Energy & Tech. Please turn to Slide #8. Thank you. Household Care delivered 7% organic sales growth in the first 9 months of the year and 6% in the quarter. Growth was mainly volume driven and with positive contribution from price on par with the group level. Emerging markets contributed significantly to the strong performance, both in Laundry and Dish, supported by solid growth in the developed markets. Performance was driven by increased market penetration as well as innovation. Growth in the third quarter was positively impacted by timing, easing the impact of end market normalization in developed markets. On the innovation front, we launched 1 new product in the third quarter, Pristine Advance, as part of the Freshness platform. This launch targets consumers seeking energy-efficient, time-saving laundry solutions, as it delivers deep cleaning and fresh results even in quick and cold washing cycles. Key growth drivers for the year continue to be innovation, increased penetration, pricing as well as industry volume growth, where we see a normalization in developed markets through the second half of the year. Please turn to Slide #9 for Agriculture, Energy & Tech. Thank you. Agriculture, Energy & Tech delivered organic sales growth of 8% in the first 9 months and 7% in the third quarter. This was driven by a strong growth in energy and supported by tech and agricultural. Growth was driven mainly by volume, and pricing contributed positively, in line with the group. Growth in energy was led by Latin America and India, driven by increased ethanol production capacity and a strong growth in Europe. Growth in North America was also supportive, driven by greater adoption of innovation and growing ethanol production volumes supported by increasing exports. Additionally, a ramp-up in second-generation ethanol and penetration of Biodiesel Solutions also contributed positively across geographies. Growth in agricultural was driven by both animal and plant, while performance in Tech was led by increasing demand for solutions for biopharma production. Growth in the third quarter was driven by similar factors, as those for the first 9 months, including a strong performance in Energy, supported by Agriculture. For 2025, growth in Agriculture, Energy & Tech is expected across all industries, supported by a positive impact from synergies. Growth is expected to be led by Energy. And now, let me hand over to Rainer for a review on the financials and the outlook for 2025. Rainer, please?
Rainer Lehmann: Thank you, Ester, and good morning, everyone, and welcome to today's call also from my side. Let's turn to Slide 10. Please note that for the year-on-year comparison figures presented today, we have used pro forma figures as our baseline comparison for year-to-date 9 months numbers. The corresponding IFRS-based figures are available in the statement released this morning. Q3 year-on-year figures are IFRS based and fully comparable. In the first 9 months, sales grew 8% organically and 7% in reported euro as currency provided a 3 percentage point headwind while M&A impacted development positively by 1 percentage point, driven by the Feed Enzyme Alliance acquisition we finalized in June. In the third quarter, sales grew by 6% organically and by 4% in euro. Currency headwinds continued to be significant and amount to 5%, but were offset partly by the 3% positive contribution from the Feed Enzyme Alliance acquisition, which was in line with expectations. Turning to our profitability. The adjusted gross margin was 58.9%. This is an improvement of 250 basis points year-on-year. Lower input costs, including the cost of energy as well as economies of scale and productivity improvements led to the strong development. Pricing and synergies also had a positive impact, while currencies impacted negatively. The adjusted EBITDA margin was 37.3%. This was 130 basis points higher than the first 9 months of last year and explained by scale, the improvement in gross margin and synergies, countered by strong negative currency effects as well as expected reinvestments to support growth. Please note that the divisional adjusted EBITDA margins for the quarter are slightly impacted by minor year-to-date adjustments, reflecting divisional performance. Needless to say, though, that both divisions continue to deliver strong profitability. We continue to invest in our business. And as Ester mentioned, we are further stepping up our commercial presence and customer-facing activities, particularly in emerging markets. Special items were around EUR 50 million and primarily consists of transaction costs related to the Feed Enzyme Alliance acquisition. It also includes integration expenses as well as some initial expenses for the new global ERP system related to the combination. The diluted adjusted earnings per share was EUR 1.19, an increase of 20% compared to first 9 months of last year. If we adjust for PPA amortization, the earnings per share were EUR 1.54, which also represents an increase of 20% compared to the year before. Operating cash flow amounted to EUR 193 million in the first 9 months, which is an increase of around EUR 90 million compared to last year. This was driven by the improvement in net profit, partly offset by an increase in net working capital, mainly from higher inventories and increased receivables resulting from a strong sales performance. Due to the still low CapEx activities, which we plan to ramp up in Q4, free cash flow before acquisitions increased by 16% to EUR 668 million for the first 9 months of the year compared to EUR 576 million last year. With this, let's now turn to Slide #11 to talk about the outlook. Please note that the outlook is also based on current levels of global trade tariffs and current foreign exchange rates. And as Ester mentioned, we're lifting the bottom end of the range of the organic sales growth outlook and now expect 7% to 8% for the full year, with an indication of mid-single-digit organic sales growth in the fourth quarter. This is a result of a strong first 9 months performance, including favorable timing in the third quarter. Growth will continue to be driven mainly by volumes and with a similar positive pricing impact of around 1% across both divisions. Sales synergies are still expected to contribute around 1 percentage point to the organic sales growth for the year. For the adjusted EBITDA margin, we expect to be at the lower end of the 37% to 38% range. This includes significant currency headwinds of around 1 percentage point compared to our initial expectations as our adjusted EBITDA is fully impacted by currency fluctuations. As a reminder, please note that we show the FX hedging gains and losses as part of the net financial items below the EBIT line, protecting our net profit. In conclusion, and based on the results from the first 9 months of the year, we're in a strong and confident position in our ability to achieve our full year outlook. With this, I will hand back to Ester for a wrap-up. Ester?
Ester Baiget: Thank you. Thank you, Rainer. Could you please turn to Slide #12? Let me summarize our message here today. Novonesis' diverse portfolio of innovative biosolutions, broad market reach and unique scalable production setup continue to drive strong performance. With the results we're presenting here today, we show that we continue to deliver on our promises with the strength and the resilience of our business model. We continue to execute successfully on our strategic priorities, positioning ourselves firmly to deliver on our 2030 targets. And with that, we're now ready to open for Q&A. Lorenzo, if you could open the Q&A, please?
Operator: [Operator Instructions] The first question comes from the line of Thomas Lind from Nordea.
Thomas Lind Petersen: So 2 questions from my side. The first one is regarding pricing. At the CMD last year, you said that you were aiming for pricing up until 2030 of 1% to 2% annually. This year, it's 1%. But given the tariffs impacting your business, I would assume that you would take price to sort of offset some of the impact here. So maybe going into -- also to '26, is it fair to assume that 2% pricing in '26 is more likely than the 1%? And then the second question is just regarding your 19 new product launches here in '25, which is impressive. But still, it seems a little bit like a slowdown, at least when comparing obviously to the impressive 45 product launches last year, and then, just 4 here in Q3. I would assume that given the revenue synergies, we would see sort of a ramp-up in product launches or at least that's just my expectations. But yes, if you could put a few words on that, that would be great.
Ester Baiget: Excellent. Thank you very much, Thomas, for these very good questions. Let me start with the comments and questions on pricing, and then, I'll pass it to also to Claus to bring further color on innovation. It is true. We're very pleased with our 8% growth year-to-date, robust growth, mainly volume growth and also from pricing. And this is a growth -- the quality of that growth year-to-date, it gives us a very high level of comfort. We grow across all geographies, across all segments, also with double-digit growth in emerging geographies. The 1% price, it is an area that we committed to. We see the impact translating down in the bottom line. And regarding your question on tariffs, it's important to mention that most of what we produce in -- that we sell in North America, it's produced in North America. And then where it's not, then we see also pricing as a driver of ensuring that it's a net neutral effect for the year, which we continue to stay committed to. Moving forward, we are in a really good place of comfort, mainly particularly on the volume growth, the underlying strength of our business model, where pricing will continue to be a driver of growth. And yes, on the 1% to 2% CAGR for the period on pricing that you indicated to for the strategic period. Then, regarding innovation, before I pass it to Claus, I would like to remind you that -- and please let's all remind us that the solutions that are less than 5 years old, they continue to contribute to whom we are with more than 25 -- more than 20% of our revenue is for new launches. And the quality that we bring in continues to be the driver of growth. We enable value growth for our customers through innovation, through solutions that they lead to higher yield, higher efficiencies, higher productivity, differentiated claims. And then I would invite you to look, yes, at the 19 year-to-date, but for sure, the continued contribution that innovation puts on the strength and the quality of our growth.
Claus Fuglsang: Yes. Thank you, Ester. The 19 launches year-to-date is actually on plan and what we expected. We expect some acceleration here in Q4. It's not about hitting the same number as last year, but the impact, of course, it makes in the market in terms of sales growth and contribution to revenue. So we are pretty happy with the performance. As Ester said, we are well above the 20% of sales from new products. So thank you.
Operator: The next question comes from the line of Thomas Wrigglesworth from Morgan Stanley.
Thomas Wrigglesworth: Two from me, if I may. Firstly, on Household Care, could you break out the difference in performance between emerging markets and developed markets? Obviously, there's all the data we see in developed markets from your customers is obviously looks very volume negative. So it would be great to know the kind of split of growth between those 2. And secondly, on the Dairy performance, how much of the growth in Dairy do you think was a function of pull forwards? And associated with that, as you win a customer adoption, is there a kind of a preloading sale that takes place that means that growth becomes harder and harder because as adoption rates and penetration increases, you effectively have a high base, and there's less people to adopt in the future? So I'm just kind of trying to get a sense of where we are in that high protein adoption phase as you see it today.
Ester Baiget: Thank you very much, Thomas. I will let Tina bring color on your question on Household Care, and then, Andrew on Dairy.
Tina Fanø: Yes. Thank you so much, Thomas. So the performance in emerging markets is a key growth driver in Household Care. And it is a result of the strategy we have had for a number of years, where we have been investing in order, both on innovation and also on feet on the ground in order to cater for these markets. So Household Care is significantly outgrowing the developed markets in Household Care. In terms of their relative size, I assume you know the split between emerging markets and developed markets for the group, and Household Care is a bit more exposed than group to the emerging markets.
Andrew Taylor: And then thank you. This is Andrew, and thank you. In terms of your questions on Dairy, a couple of things, so we did see some positive timing effects in Q3 as some of the ramp-ups from our customers, especially in North America, came a bit quicker than we had expected. And then, if you kind of take the second piece of the question, because they're clearly related on the loading, I would separate it into 2 types. So there's sort of the new innovations that you're driving across the Dairy value chain. So things, for example, solutions for high-protein yogurt, those tend to have a natural cycle, but there's many of them over time. With regards to productivity, and then, also DVS conversions, we've talked about before, those do have a bit of a loading, but none of them is big enough to really drive a huge preloading effect overall for the business. And the exciting part is we see a continued pipeline of those opportunities over time.
Operator: The next question comes from the line of Georgina Fraser from Goldman Sachs.
Georgina Iwamoto: One of them is a follow-up, if we could hear a little bit more about Dairy, and strength there is particularly impressive. And I'd love to hear a bit more about what you're seeing in emerging markets and the sustainability of those trends medium term. And then second question is on Beverages. So I think it's the only market that you're seeing that looks a bit weak. It's declining. Should we expect these trends to continue? Or do you have any product launches or customer wins up your sleeve?
Ester Baiget: Thank you, Georgina. We feel also very pleased about where we are and particularly on starting to see the fruits of the seeds that we put in the past. We have been investing in emerging markets. We have been investing in innovation, and we see, reflected in the numbers, the translation of those investments into growth. And now, I'll pass it to Andrew.
Andrew Taylor: Yes. Thank you, Ester. So taking those 2 things in turn. So with regard to emerging markets, the drivers there are a few things. One is just the fundamentally quicker underlying volume growth of emerging markets vis-a-vis domestic markets -- or sorry, developed markets. The second thing that I would call out specifically is we have been investing in emerging markets over the years. We are seeing the benefits of having local presence, being able to go more direct because that actually just leads to a quicker share as well as the overall market growth. And the third thing I'd highlight, which is a bit different, is there's parts of the Dairy market that are relatively newer in big parts of Asia. So for example, cheese in China. Cheese in China, we're seeing good growth in off a small base. But because we have leadership in that technology, we're able to be that partner of choice in China. So the combination of those 3 things is really what we're seeing. With regards to Beverages, I think everyone's seen there's challenges in the alcoholic beverage market across the piece. We are not immune to those volume challenges. We're working really hard, though, to actually drive better both penetration of the existing solutions, but launch the next generation of solutions. That, of course, takes time, but we're working really hard to continue to grow in Beverages.
Operator: The next question comes from the line of Alex Sloane from Barclays.
Alexander Sloane: The first one, actually, a follow-up on Dairy, in the first half, you talked about sort of new enzyme solutions to help maximize whey byproduct value streams for cheese customers. I mean, clearly, we're seeing we've very strong demand for whey right now given added protein formulation trends in food. So I'm assuming there's quite a lot of customer appetite on this. I appreciate it's pretty quite early days, but maybe, Andrew, you could talk to the traction you're having here and in terms of customer engagement and timing around this commercialization opportunity, it would be great. And you did flag some cheese conversion tailwinds in the U.S. So it would be great if you could remind me where you are in terms of kind of global conversion to DVS cultures in cheese, which I think has more headroom than yogurt. And then, if I could squeeze in 1 more for Rainer, just in terms of the cost outlook into '26, how is that looking on energy and sugar, please, based on the sort of hedging you have, assuming the latter, maybe some tailwind? Can that offset residual FX pressures that you might be facing on the margin side in the first half?
Ester Baiget: Thank you, Alex. Those were 3 questions, the way I count them, but let's move ahead with that. Beautiful that you double-click on Dairy and the impressive results that we continue to outgrow the markets that we are present. And this is a simple formula. We enable value creation, value growth for our customers through yield, through productivity and also through differentiated claims on health, on high protein. And by staying very close with our customers, also in emerging geographies, I mean, we out -- in China, for example, we're growing in a declining market. That's the formula that's driving the growth. But I'll pass it to Andrew and Claus to build up on your first question, and then, Rainer afterwards.
Andrew Taylor: Thank you. I'll take the first part of the question and then turn to Claus. So in terms of the whey solutions, I think the way that Ester put it is exactly how we see it, which is our customers are looking for increasing productivity and increasing valorization of some of the things that historically have been treated more as offtakes. So we have a lot of interest from our customers around the world on this. And this is where being that preferred partner is so important. They're only going to work -- the best customer is only going to work with 1 player on this, and we really have invested heavily over the years to be that 1 player. Maybe, Claus, you can talk a little bit about the status of the technology.
Claus Fuglsang: Sure. It's still early days. While we do have technology that will modify solubility of proteins with this, whey is about protein and protein solubility and functionality, it's still early days. We see the customer pull and interest in collaboration on innovation, but we also expect that we will need to develop new solutions while we'll start, hopefully, getting traction on existing.
Andrew Taylor: And then taking your second question before turning it back to Ester, we do see significant headroom still in the DVS conversions. That conversion rate is about 60% around the world. Obviously, higher in developed markets, lower in emerging markets, and that's where our direct presence in those markets is so important.
Rainer Lehmann: So Alex, coming to the -- of course, I can't give you a guidance for 2026, right? We're all aware of that part. But if you think about it right now, we obviously benefited from quite some lower energy. I don't think this is going to go any lower, to be honest. So that gives you an indication there. And actually, we do not hedge raw materials on our normal production. So there, we basically are buying on the normal market, and we have to see how this develops, to be honest. And these are uncertain times. But, of course, also you've mentioned the FX, the U.S. dollar, which came down quite significantly and actually in the last days. Let's see how this -- it's quite a volatile environment, but we will be able with our also scale to actually counteract that.
Claus Fuglsang: Maybe a quick comment. We can also -- that's the good thing about our technology, it's versatile, and we can actually change between certain types of raw materials. So it's not necessarily glucose. It can be other input costs in terms of carbon.
Operator: The next question comes from the line of Lars Topholm from DNB Carnegie.
Lars Topholm: Congrats with a very good quarter. Two questions from me, please. I wonder on Household Care, if you can comment on how coming bans on microplastics is affecting your business now? And maybe for now, this is mainly Europe, I guess. But also, how you see this as a potential driver for the U.S.? And then I wonder what the status is on HMO approval in China.
Ester Baiget: Excellent questions, Lars. Tina and Henrik, please.
Tina Fanø: Yes. So let me start with the Household Care. So in general, as you also know, Lars, and we've talked about a number of times, the -- one of the strategy in Household Care is, I would say, that 3 elements: differentiation, allowing new claims for our customers, it is a matter of replacing chemicals, and then, it's a matter of the investment in emerging markets. And you are hindering on #2 here with replacement of other ingredients. And a ban on microplastics is exactly talking to that tendency. So with our technology base, we are capable of replacing a number of compounds in the detergent matrix, including things leading to microplastics. And that is also one of the key growth driver we have seen, not only in developed markets, but in fact, also in emerging markets because there is a wish to go for more cleaner formulas, to go for quicker and faster, and at the same time, lower temperature washing.
Lars Topholm: And Tina, in terms of penetration by those technologies, where are you on the curve? Is this in its infancy? Or are you already there? Or how should we think about this looking maybe 3 or 5 years ahead, please?
Tina Fanø: It is in the early days. And it keeps evolving also, what it is we can replace. As you know, I have been in the industry for many years. And if you think about what we thought we could replace 20 years ago, this is completely different, so it is in its infancy.
Henrik Nielsen: And your question on HMO in China. Good question. It's the largest market in the world on infant, as you know, and the most premiumized. Recently, we have seen now recipes approved, which is what everybody initially was waiting for with HMOs. So now HMOs can actually make their way into infant formula and into the market. We are the only player that has 5 HMOs approved in China. We are not yet in a recipe in the market, but we're working with all the leading players in China to get into products. It's difficult to say now when that will happen. But the good news is that the market is now open.
Operator: The next question comes from the line of Nicola Tang from NBP (sic) [ BNP ] Paribas.
Ming Tang: First, I was wondering if you would be able to quantify this impact from the pull forward of orders in Q3. I was just trying to have a better understanding of the underlying growth. And how do you actually know, particularly in Household, that it was a pull forward rather than just an indication of better demand? And do you have a view on current inventory levels for your customers across the wider business? I was wondering if there's any areas where customers might have built more safety stock given the tariff uncertainty. But equally, have customers actually reduced inventory too much, and so, we're having to pull forward orders as a result of that? And the second thing I wanted to ask about, I think now there's about 300 basis points difference in EBITDA margins between the 2 divisions on a year-to-date basis. I was wondering if you see any structural reasons why the Food & Beverages and Human Health profitability will be lower going forward? Or do you expect both divisions to hit your 39% target by 2030?
Ester Baiget: Thank you very much, Nicola. We're really pleased on the performance that we had year-to-date with 8% growth. And yes, this is including some timing effects in Q3. And with that, we also aim to mid-single-digit growth for Q4. It's important to mention when we -- what we feel very pleased about is that we continue to deliver on our promises and what we said we would do. We said we would have a stronger first half than the second half, and that's where we are in. And also, we said, and we continue to say, we are very close to our customers, and we are there to enable that growth. We have been investing across the whole globe and particularly in emerging geographies on driving growth. And we see some timing effects from 1 quarter to the other. There has been in Dairy, maybe on some -- in cheese on the transformation being a little bit ahead from one quarter to the other, it's okay, we are very close to our customers and whenever that happen, also in emerging geographies, maybe a little bit faster than 1 quarter to other. We don't look for the quarter. We're here for the full year. And the lifting of the low end of the guidance and the comfort of how we're going to finish the year strong, including the impact of emerging -- of exiting certain countries, all in that together, leading to your second point of the dynamics in the market. We live in the same world that you live. But at the same time, we continue to see the strength of the drivers that trigger the underlying growth of our business. We enable value growth for our customers, and that's strong. That's today, and we feel very comfortable on -- we're not going to go into the guidance for next year, but we feel very confident on delivering on the strategic targets that we committed on the 6% to 9% growth until -- CAGR until 2030. Then the profitability of the business, strong and bold across all areas. And I will pass it to Rainer to build on that.
Rainer Lehmann: So regarding the differential in the 2 divisions regarding profitability, yes, you basically answered -- your answer was in your question, right? Because it's clearly on the Human Health and HMO side. There we have a dilutive impact, that is known, that, of course, over time. And then with scale, we will improve the profitability. But let me remind you that really both divisions run in a very high profitability, especially compared also what else is out there. So yes, we're going to improve, it's going to improve and it's going to -- the gap is going to narrow, I would say.
Operator: The next question comes from the line of Sebastian Bray from Berenberg.
Sebastian Bray: Can I start with the financial items line? And what would be expected for '26, because the consensus seems to only have a modest step up in this? And my understanding is that there are EUR 20 million to EUR 30 million of FX hedging benefits, and you have the annualization of the EUR 1.3 billion of debt that was placed to purchase the DSM Feed Enzyme business stake. What level of financial items cost step-up would be reasonable in 2026? Could it go from, let's say, EUR 75 million all the way up to EUR 105 million, EUR 110 million? And my second question is on the bioenergy market. This seems to have been fine in Q3. It's not really commented upon in the release, but -- is anything changing there? Is, basically, Novonesis still taking market share of everybody? Is 2G ramp-up proceeding as expected? Any changes incrementally on what's expected as we move into 2026?
Ester Baiget: Rainer will -- thank you, Sebastian, and Rainer will answer your first question, and then, Tina build on Bioenergy.
Rainer Lehmann: So my answer is actually going to be only very limited because I'm not going to give you -- or can give a guidance for a specific 2026 on the financial items. We'll do that once we finish the year, and then, of course, publishing in February and then giving the outlook will, as we do always, give an indication of our finance line items. But generally, your line of thought goes, is in the right direction.
Tina Fanø: And on Bioenergy, you are right on the market in Q3. And also, if you look in the beginning of the year, there is growth in the North American market. I assume that's the one you're referencing, Sebastian. But overall, in that industry, I think it's important to think about the diversification story we have talked about so many times. So it's the geographical diversification, which is helping us, both in the quarter and year-to-date. You have heard me talk about India as well as Latin America as key growth drivers. We have also talked about the feedstock diversification, where we -- and also both year-to-date and especially in the quarter, we see good growth from biomass or second-generation ethanol as well as biodiesel. So all of that is contributing to the growth. North America is a more -- it's a big part of our business, but it is a more slow in growing, where we are growing roughly in line with market. If you think about specific market developments, I would say -- the fundamentals remain the same. We do see both India and Brazil talking about higher blend rates for first-generation ethanol. 2G is also continuing to get online. You know we have plans both in Brazil, India and also in Europe. And biodiesel plants is also coming on. So the growth drivers remain intact, and they are all supporting the growth year-to-date.
Operator: The next question comes from the line of Chetan Udeshi from JPMorgan.
Chetan Udeshi: I had actually 2, both are related in a way. One of the things -- or one of the trends we've seen over the past year in the broader specialty chemical ingredient market is increasing competition from China, India, and whereas you guys are growing very, very fast in emerging markets, and I'm -- I mean, I'm sure based on what I've seen, there are regional players that you compete with in both India and China. So I'm just curious what sort of regional competitive dynamics do you see across your businesses because it's quite interesting that you're growing so fast in emerging markets where others are actually seeing much more competition. The second question related is -- we saw IFF announce a collaboration with BASF on the detergent enzymes and solutions side of things. Do you have a view on what that might mean in terms of competition for Novonesis in the Household Care market down the line?
Ester Baiget: Thank you, Chetan. Very good questions. We're pleased on our growth in emerging geographies, and we see it as an outcome of self-help efforts that we have made in the past. And we also see it as a -- simply the outcome of the strength of our solutions and being close to our customers in a market, which is in demand of new answers. Our solutions enable higher yields and productivity, are also in emerging geographies and also differentiated claims for consumers that they are seeking for new answers. And we have been investing in the last years on more boots on the ground to be able to play and co-create with our customers, particularly in emerging geographies. Powder lab in India for Household Care or in Latin America or baking lab in Turkey or more capability for Dairy in China, these are self-help efforts that we have made that we see them reflected now in growth. We see -- of course, we live in the same world that you see, and we see other players in the industry. But the formula of success for our customers, it is listen, understand their needs and then provide them with bio-based solutions that enable them growth through high efficiencies, through bringing health claims, through bringing solutions that they would not be able to do without our products. And that's the model that we are investing combined with a robust global asset footprint that we supply reliably, and we are there with our customers to deliver that growth in a resilient and predictable way. And I'll pass it to Tina on Household Care.
Tina Fanø: Yes, and I'll be relatively short, Chetan. As we talked about also in the question from Lars Topholm earlier, what we are doing, and let me focus in on that compared to what others are doing. So what we are doing is we invest in innovation. We invest in innovation with our customers, and that includes replacing chemicals. So we go in and replace polymers, we go in and replace brightness, microplastics and so forth. And that is one of our growth drivers in Household Care. That is the winning strategy as we see it.
Ester Baiget: One last question, please.
Operator: Our last question comes from the line of Soren Samsoe from SEB.
Soren Samsoe: Congrats with the result. So first, on Dairy, just if you can indicate a bit more on how your growth is because it must be quite strong double digit given that you have almost 10% growth in Q3 and that brewing is negative. Then, also, given that milk prices are very low than we have historically seen, sometimes cheese manufacturers producing for inventory, is that giving you a temporary boost in Dairy at the moment? And then secondly, on sales and distribution costs, they're going up quite a lot, but maybe you can give us -- or quantify how much is up if you adjust for DSM? And also what it is that you're investing in commercially, that could be interesting?
Ester Baiget: Thank you so much, Soren. Andrew, Rainer, please.
Andrew Taylor: Yes. On Dairy, the exciting part is our growth is broad-based. So if you look across both geographies as well as the large applications of cheese or fresh dairy, we are seeing good growth in most places. That's really driven by a couple of things, one of which we talked about earlier, which is penetration essentially and underlying market growth, especially in the emerging markets. The second is some of the trends that we're seeing on things like high protein. And the third is, of course, the continued productivity. So we are -- remain excited about the growth coming in to the remainder part of this year and into the next several years. But, of course, that we're trying to drive that market penetration through new innovations we have with our customers on all those places and really position ourselves as the market leader.
Rainer Lehmann: Soren, regarding the increase on the S&D cost sales ratio, of course, there is a part of DSM in there. We're not going to specify it directly. But keep in mind that really -- this is a result out of continuous investing in emerging markets, right? What we said we did in the past, and we are going to continue to do so throughout the strategy period. We give you an indication what the overall inorganic contribution is, and it's accretive to the overall EBITDA. So basically, there you also can back into what you think might be the impact on the operational expenses overall. It's not just S&D.
Ester Baiget: Excellent. Excellent answer. Thank you very much all for your questions. We're closing the day and looking forward to continue to interact with you within the next days moving forward. Thank you so much.